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Citi: Mobile Venture Will Go Well Beyond Basics

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Citigroup Inc., one of the first companies to introduce a mobile banking service, is making plans for a new version of the technology.

Citi said Thursday that it has formed a joint venture with SK Telecom Co. Ltd., the largest wireless carrier in South Korea, to develop mobile financial services technology.

The new company, Mobile Money Ventures LLC, is working on mobile banking software that will offer a variety of financial capabilities, including payments and person-to-person transfers.

Steven Kietz, the business manager for Citi's e-commerce unit and the point man for Citi's mobile strategy, said the mobile banking services available today tend to offer only basic functions such as balance inquiries and bill payments. "We plan on going much further than that," he said in an interview.

Mr. Kietz has also been named Mobile Money Ventures' chief executive. The company, which was formally created in October and is based in San Francisco, plans to begin testing the software with Citi customers in select markets in the second half of 2008. Mr. Kietz would not name the markets or even say whether the test sites would be in the United States.

He said that combining SK Telecom's engineering expertise with Citi's marketing clout and 200 million retail customers in 54 countries would yield a "next-generation" mobile banking application and could accelerate the adoption of mobile financial services worldwide.

Citi has a well-regarded online banking site that it developed in-house, and Mr. Kietz said "we think we can do the same thing on" mobile phones.

Mobile Money Ventures is developing a downloadable application based on the one Citi rolled out in April 2007 using software from mFoundry Inc. Besides mFoundry, several other software companies are working on mobile banking technology, including ClairMail Inc., and Firethorn Holdings LLC, which was acquired in November by Qualcomm Inc.

But Mr. Kietz said that the current mobile services, which many banks have introduced in the past year or announced plans to offer, fall short of Citi's long-term vision for mobile banking.

For example, he said that with SK Telecom's expertise, the venture plans to make the mobile banking application function more effectively with the features of specific models of handsets.

The application also would tie in to other features of the handset, such as its calendar and address book. As more handsets come to market with Global Positioning System features, the application could deliver offers customized to the user's location, Mr. Kietz said.

Citi is also linking the upcoming application to a variety of alternative payment mechanisms it is pursuing, including contactless payments using near-field communication chips and person-to-person payments, which Citi has been testing with with Obopay Inc. Citi said last month it is planning to connect the Obopay system to its checking accounts, potentially by the fourth quarter.

Mobile Money Ventures is equally owned and funded by SK Telecom and Citi, and its board will consist of three executives from each company.

Nick Holland, a senior analyst at the research and advisory firm Aite Group LLC, said there has been little collaboration between banks and carriers to date. But as mobile banking becomes more widely used and as companies like Citi try to make their services more powerful, the two industries will need to work more closely. "It is a logical step to be working alongside the operators rather than around them."

Mr. Holland noted that SK Telecom also has a joint venture with the Internet service provider EarthLink Inc. called Helio, a mobile virtual network operator targeting the youth market. "SK Telecom is very keen to get a foothold in the U.S. market" and is willing to make large investments in projects that may take a long time to pay off, he said. "Maybe a Citi-branded phone is not out of the question."

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